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INTEGRATING INCLUSIVE GREEN FINANCE POLICIES INTO NATIONAL FINANCIAL INCLUSION STRATEGIES
CHALLENGES OF DEVELOPING A GREEN NFIS
2. COORDINATION MECHANISM
There are specific challenges concerning the integration of IGF into an NFIS.
It has been established that countries must discuss the benefits of a climate-related financial risk management framework to advance the Sustainable Development Goals (SDGs) and the sustainable finance agenda. This also links to climate-related risk management playing a role in reaching or maintaining financial stability objectives. Therefore, the development of IGF policies should not be considered complementary; they are urgently needed and must be collectively implemented.
Some of them include building consensus among key stakeholders on nationally accepted definitions of sustainable finance, green finance and IGF; establishing efficient coordination mechanisms (ensuring policy alignment and coherence between IGF and the mainstream policies on climate change); determining IGF products and services (adopting criteria that will be used to describe and include IGF products from different financial subsectors, including climaterelated and IGF disclosures), and establishing an M&E framework (gathering information and data and setting indicators).
1. BUILDING CONSENSUS Establishing consensus among key stakeholders on nationally accepted definitions of sustainable finance, green finance and IGF. IGF and climate change bring together diverse stakeholders from the financial sector, private sector, and government ministries and agencies responsible for the environment and management of natural resources. Consensus on acceptable definitions of IGF will help improve the general understanding of what is considered “green” and take into account adaptation or resilience building, mitigation or low-carbon development, and natural resource management. Commonly accepted definitions of sustainable finance and green finance that are consistent with those used by the lead environmental government ministries, public finance and the existing FSP’s products could be integrated into an NFIS. It is important to integrate material ESG factors into green definitions. Alignment of green definitions with existing national or regional green or sustainable finance taxonomy is highly encouraged.
Ensuring policy alignment and coherence between IGF and the mainstream policies on climate change.
In order to achieve climate change policy coherence and its milestones, the NFIS should build on existing policies and regulations in order to harmonize definitions and ensure alignment of IGF with national priorities, priority sectors and timelines. This type of alignment should also be sought after by the stakeholders working to implement the NFIS. To ensure alignment with the country’s climate goals and strategies, it is essential to consult: the SDGs and Paris Agreement to verify any existing commitments, which may have been translated into a national-level climate change policy. These include the country’s nationally determined contributions (NDCs); national adaptation plans (NAPs); national climate strategies; SDG strategies, and similar key development and environmental policies. In addition, the green NFIS should include a dedicated section highlighting how IGF policies will be linked to the implementation of the national-level climate change policy and the SDGs. IGF intends to enhance the practice of sustainable finance and green finance with a clear focus on financial inclusion under NFIS. However, countries need to determine if: > they have written policies on sustainable finance and green finance that can support the implementation of IGF policies > these should be issued simultaneously with the NFIS or as standalone policies Since the policy alignment requires multi-sectoral participation, a proper coordination mechanism needs to be effectively facilitated.
